Business Standard: December 27, 2013
New Delhi: The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved two road projects worth Rs 2,000 crore, to be undertaken in Bihar and Gujarat. The project in Bihar is expected to cost Rs 1,408 crore, while the project in Gujarat is expected to cost Rs 503 crore.
“The CCEA has approved the project for the development of four laning of the (approximately) 93 km-Gaya-Hisua-Rajgir-Nalanda-Bihar Sharif section on the National Highway-82 in Bihar. The total project cost is estimated at Rs 1,409 crore, including Rs 1,216 crore as civil construction and supervision works and Rs 193 crore as the cost of land acquisition, rehabilitation and pre-construction activities. The project will be completed within three years of signing of the contract agreement,” a statement from the roads ministry said.
The Japan International Cooperation Agency (JICA) will provide loan assistance for the project in Bihar. JICA had earlier sanctioned loans worth Rs 1,300 crore for undertaking road projects in Bihar this year.
CCEA’s decision to award more road projects comes at a time when the road ministry has been struggling to award projects during the current financial year. So far, the ministry has awarded projects worth 500 km, while it had set itself a target of 9,000 km at the beginning of the financial year. The inability to fast-track the awarding of road projects during a crucial election year also had the prime minister allowing the road ministry to award more projects under the government-funded mode as against the public private partnership or PPP mode.
The ministry is now looking at awarding 2,000 km of road projects before the end of the financial year through the government-funded mode, after the private sector decided to stay away from undertaking infrastructure projects. The National Highways Authority of India (NHAI) has also been allowed to tap the bond market to raise Rs 3,500 crore through a bond issue, while the government will invest the remaining Rs 12,000 crore to construct 2,000 km of roads during the year.
Industry experts have often slammed the government for the lack of a single window clearance policy for the mess in the road sector after private sector participation hit a record bottom in the past year. In addition, private companies have also been requesting the government to restructure their premium payments, due to NHAI over the next 20 years to relieve their financial burden as the economy goes through a slowdown. A policy allowing private developers to exit projects is also being considered currently.
The roads ministry is looking to award road projects worth Rs 5.8 lakh crore during the 12th Five-Year Plan and the setting up of a road regulator to address issues concerning dispute resolutions. Earlier this year, the NHAI had to scrap projects worth Rs 3,000 crore due to land acquisition troubles in Kerala and Goa.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.